Question

D’Lite Dry Cleaners is owned and operated by Joel Palk. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets, liabilities, and common stock of the business on July 1, 2016, are as follows: Cash, $45,000; Accounts Receivable, $93,000; Supplies, $7,000; Land, $75,000; Accounts Payable, $40,000; Common Stock, $60,000. Business transactionsduring July are summarized as follows:

A.	Joel Palk invested additional cash in exchange for common stock with a deposit of $35,000 in the business bank account.
B.	Paid $50,000 for the purchase of land adjacent to land currently owned by D’Lite Dry Cleaners as a future building site.
C.	Received cash from cash customers for dry cleaning revenue, $32,125.
D.	Paid rent for the month, $6,000.
E.	Purchased supplies on account, $2,500.
F.	Paid creditors on account, $22,800.
G.	Charged customers for dry cleaning revenue on account, $84,750.
H.	Received monthly invoice for dry cleaning expense for July (to be paid on August 10), $29,500.
I.	Paid the following: wages expense, $7,500; truck expense, $2,500; utilities expense, $1,300; miscellaneous expense, $2,700.
J.	Received cash from customers on account, $88,000.
K.	Determined that the cost of supplies on hand was $5,900; therefore, the cost of supplies used during the month was $3,600.
L.	Paid dividends, $12,000.

	Required:
	3.c. Prepare a balance sheet as of July 31, 2016. Refer to the Accounts in the accounting equation grid and to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading.
	4. Prepare a statement of cash flows for July. Enter amounts that represent cash outflows as negative numbers using a minus sign. Refer to the list of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. You will not need to enter colons (:) or the word Deduct on the statement.

Answer 1

1)

Retained Earning = Assets - Liabilities

Assets as at 1 July 2014 = Cash + Accounts Receivable + Land + Supplies

                                      = 45000+93000+75000+7000

= 220,000

Liabilities as at 1 July 2014 = Capital Stock + accounts Payable

                                            = 60,000 + 40,000

                                            = 100, 000

Therefore retained earnings as at 1 july 2014 = 220,000 - 100,000

                                                                        = $ 120,000

2)

Balance Sheet as at 1 july 2014
Liabilities	Amount	Assets	Amount
Owner's Equity	$180,000.00	Cash	$45,000.00
		Account Receivables	$93,000.00
		Supplies Stock	$7,000.00
Account Payble	$40,000.00	Land	$75,000.00
	$220,000.00		$220,000.00

Total Assets= 220,000.00

Account Payble= 40000.00

Owner's Equity= Total Assets- Total Liabilities

Owner Equity= 220000-40000= 180000 USD

3.

Sales	$116,875.00
Expenses:
Supplies Consumed	$3,600.00
Dry Cleaning Exp.	$29,500.00
Rent	$6,000.00
Wages	$7,500.00
Truck Exp.	$2,500.00
Utility Exp.	$1,300.00
Misc. Exp.	$2,700.00
Total Expense	$53,100.00
Net Income	$63,775.00

Credit Sales	$84,750.00
Cash Sales	$32,125.00
Total Sales for July	$116,875.00

Op. Bal. of Debtors	$93,000.00
Add; Credit Sales	$84,750.00
Less: Cash Received	-$88,000.00
Closing Balance	$89,750.00

Op. bal. of A/C Payble	$40,000.00
Add: Purchase supplies	2500
Less: Paid to Crs.	-22800
Closing Balance	$19,700.00

Cash Op. Bal.	$45,000.00
Cash Sales	$32,125.00
Received from Customer	$88,000.00
Cash Introduced	$35,000.00
Rent Paid	-$6,000.00
Cash Paid for land	-$50,000.00
Paid to Crs.	-$22,800.00
Wages paid	-$7,500.00
Drawing	-$12,000.00
Truck Exp. pAid	-$2,500.00
Utility Exp. Paid	-$1,300.00
Misc. Exp. Paid	-$2,700.00
Closing Cash Bal.	$95,325.00

Owner's Equity
Opening Balance	$180,000.00
Net Profit	$63,775.00
Cash Investment	$35,000.00
Drawing	-$12,000.00
Closing Balance	$266,775.00

4,

	Balance Sheet as at 31 july 2014
Liabilities	Amount	Assets	Amount
Owner's Equity	$266,775.00	Cash	$95,325.00
		Account Receivables	$89,750.00
Payble for Dry expense	$29,500.00	Supplies Stock	$5,900.00
Account Payble	$19,700.00	Land	$125,000.00
	$315,975.00		$315,975.00